Investment Product and Service Launches

Lockwood Adds Expansive Model Portfolios to Managed Account Platform; Capital Group Adopts PFaroe; PGIM Lengthens ETF Space with Second Actively Managed Fund; and more.

BNY Mellon’s Lockwood Advisors announced the addition of 54 new model portfolios to its Managed360 program, nearly doubling the number of strategists and underlying model portfolios available to financial professionals and bringing the total number of third-party model portfolios to 123 and strategists available via the program to 13.  

Managed360 delivers a streamlined managed accounts experience, leveraging the power of Lockwood affiliate Pershing LLC’s NetX360 platform to help financial professionals scale their managed accounts business.

The latest additions are mostly globally diversified portfolios that provide advisers and reps with a wider range of options to help them meet investors’ evolving goals while also managing costs.

“Our clients are increasingly looking to enhance the client experience by spending more time with investors,” says Joel Hempel, chief operating officer at BNY Mellon’s Lockwood. “Model portfolio programs are proving instrumental in that regard as they can help financial advisers manage investor goals and scale business. By adding this group of well-recognized strategists to our program, we are providing financial professionals with a diverse selection of portfolios so they can focus on delivering a higher-touch experience to investors and drive business growth.”

New strategists and models now available to clients on the Managed360 program are: First Trust; Goldman Sachs Asset Management; J.P. Morgan Asset Management; New Frontier; and S&P Investment Advisory Services.

In addition to the above, 11 new BlackRock models from BlackRock Target Allocation series with varying increments of underlying equity and fixed income exposures have been added to the program, bringing the total number of BlackRock models on Managed360 to 20.

“We are focused on bringing our clients a diverse, yet select, menu of choices,” says Matthew Forester, chief investment officer at BNY Mellon’s Lockwood. “We believe these highly competitive and well-rounded additions to our program will help financial professionals meet a broad range of investor needs through various market cycles.”

Capital Group Adopts PFaroe

Capital Group has adopted PFaroe to assist defined benefit (DB) pension clients in enhancing pension risk management decision making and promoting practical investment solutions suitable to each plan’s liabilities.

According to Capital Group, the LDI Solutions team will leverage PFaroe’s asset-liability modeling tools and its reporting platform to work more collaboratively with clients and prospects; demonstrating key findings efficiently, deepening engagement and generating a greater understanding of risk to drive informed strategic asset allocation decisions.

Gary Veerman, head of LDI Solutions, Capital Group, says, “Ten years ago, you could be a credible LDI player by just having a successful investment product suite. Today, I view being able to deliver analytical capabilities, asset allocation expertise and a more consultative mind frame a necessity to being truly successful in the pensions space and an elite LDI manager. I envision PFaroe being a key component to growing our business and really taking our LDI reporting and analysis to the next level.”

He adds: “PFaroe gives us a scalable way to provide the asset allocation perspective that plan sponsors need to be evaluating. That is potentially the most important aspect of the conversation you have with a client or prospect, as opposed to telling them you have a good investment suite.”

Matthew Seymour, CEO of RiskFirst, says, “Capital Group has built a very strong reputation in the LDI market and we are extremely pleased that they have chosen PFaroe to help fuel their business growth and strengthen their client partnerships. Through its advanced analytical properties and its widespread presence in the market, PFaroe is a tool proven to be a real facilitator of collaboration and a means of promoting understanding and strategy optimization – and this is all the more important in this increasingly complex market.”


PGIM Lengthens ETF Space with Second Actively Managed Fund  

PGIM Investments launched its second actively managed exchange-traded fund (ETF), the PGIM Active High Yield Bond ETF, as it continues to expand the ETF platform created earlier this year.

“Having the benefit of scale has provided us the flexibility to expand our platform and thoughtfully develop strategies in a variety of vehicles that meet client demand,” says Stuart Parker, president and CEO of PGIM Investments. “When it comes to ETFs, our focus is on developing competitive products that align with our core investment capabilities.

PGIM Investments’ first ETF, the PGIM Ultra Short Bond ETF (NYSE Arca: PULS), was launched in April. Just like PULS, the PGIM Active High Yield Bond ETF (PHYL) is also actively managed by sub-adviser PGIM Fixed Income. PHYL is priced at 0.53%, 14 basis points below the average active high yield ETF, according to Morningstar as of August 31, 2018. The fund invests primarily in high yield bonds and seeks to generate total return through a combination of current income and capital appreciation.

“We see a lot of opportunity for an experienced active manager with a core capability in high yield bond investing,” says Parker. “Our investors couldn’t be in more capable hands—our portfolio management team has the experience, credit research, and risk management capabilities critical to investing in this sector.”

The PGIM Active High Yield Bond ETF is managed by the same PGIM Fixed Income team that manages the 5-Star Overall Morningstar-rated PGIM High Yield Fund as of June 30, an actively managed open-end fund that has also earned Morningstar’s Gold Analyst rating as of July 23. 


Reliance Trust Chooses Northern Trust to Support CITs

Northern Trust has been selected by Reliance Trust, an FIS company, to provide global custody, fund administration and fund accounting services for collective investment trust (CIT) funds, expanding a key relationship in its growing CIT fund services business. 

“We are excited to build on our relationship with Reliance Trust,” says Dan Houlihan, head of Asset Servicing, Americas at Northern Trust. “Our platform is structured to offer fund managers an end-to-end solution that combines Reliance Trust’s expertise and scale as a trustee with Northern Trust’s global operations technology, financial strength and decades of experience supporting CITs and other fund structures.” 

CITs continue to grow in popularity as a fund structure for tax-exempt U.S. retirement plans and other qualified investors. Because CITs are not sold directly to retail investors, they are subject to different regulatory oversight and typically have a lower cost structure than mutual funds.

Under the agreement, Northern Trust provides services for 21 Reliance funds with approximately $7.7 billion in assets under advisement. Northern Trust’s CIT business grew by approximately 41 percent in assets under administration during the 12 months, ending June 30.

Vanguard Introduces Low-Cost ESG ETFs


Vanguard added to its current environmental, social, and governance (ESG) fund offering with Vanguard ESG U.S. Stock ETF (ESGV) and Vanguard ESG International Stock ETF (VSGX).


The new exchange-traded funds (ETFs) can be purchased commission-free from Vanguard and are available on other leading trading platforms.


“Vanguard’s new ETFs can serve as core components of a portfolio for individuals, institutions, and advisers who wish to invest in broadly-diversified, low-cost ETFs screened for certain ESG criteria,” says Matthew Brancato, head of Vanguard’s Portfolio Review Group. “At the same time, investors should recognize that funds with ESG screens may perform differently than the broad market due to the exclusion of stocks of certain companies.”


With estimated expense ratios of 0.12% for Vanguard ESG U.S. Stock ETF and 0.15% for Vanguard ESG International Stock ETF, these funds offer ESG-conscious investors low-cost access to a majority of U.S. and international equity markets. Covering more than 80% of the U.S. equity market capitalization and nearly 70% of the international equity market capitalization, the funds exclude companies involved in the production of alcohol, tobacco, gambling, adult entertainment, weapons, fossil fuels and nuclear power. The construction methodology also excludes companies that do not meet certain diversity criteria, as well as the labor, human rights, anti-corruption, and environmental standards defined by the U.N. Global Compact Principles.


Vanguard ESG U.S. Stock ETF seeks to track the FTSE U.S. All Cap Choice Index, an ESG-screened, market-cap-weighted benchmark comprised of large-, mid-, and small-cap U.S. stocks. Vanguard ESG International Stock ETF’s target benchmark is the FTSE Global All Cap ex U.S. Choice Index, an ESG-screened, market-cap-weighted benchmark comprised of large-, mid-, and small-cap stocks in developed and emerging international markets (excluding the U.S.).